The first thing you need to do is figure out how much house you are going to buy. Once you have a realistic target in mind, you can start working toward an actual goal. Next, you need to figure out your current financial picture. This involves three views:

Your income. This includes all income, from all sources, and then take away any taxes you’ll owe on that income.


Your assets. This includes only highly liquid assets – in other words, money in savings accounts, stocks and bonds, mutual funds, etc.


Your liabilities. This includes both lump-sum-type debts, such as credit card debt, and monthly payments, such as an automobile loan, or alimony payments. Now, you have figured out how much you can afford right now to put down as a down payment, and how much you can afford as a monthly mortgage payment. You have also

There are two steps to take to get to where you want to be:

It is never easy to cut back, but the only way you’ll be able to afford the house of your dreams is if you figure out where you are right now. You can even combine the above two approaches by thinking, I already have a mortgage payment (just increase your monthly rent payments to the amount of predicted monthly mortgage payment), and then save the difference!